/ Technology

Fixed should mean fixed with mobile contract prices

Today’s the day Three puts its prices up for existing customers already tied in to ‘fixed’ contracts. And today’s the day we ask Ofcom to stamp out this practice. We need your support to ensure that Fixed Means Fixed.

Did you know your fixed mobile contract could go up in price at any time? When we recently asked more than 1,500 UK adults with a mobile contract, 70% said they didn’t know companies were able to do so.

That’s despite a spate of price hikes from Britain’s biggest mobile providers; Vodafone, Orange, T-Mobile and Three. It’s an issue I’m sure many of you are familiar with here on Which? Conversation – over 1,700 comments have been made by angry mobile customers hit by such price rises.

Pledge your support for Fixed Means Fixed

If you sign up to a 12 to 24 month contract at an advertised price of ‘£25 per month’, I’m sure you’d be surprised if you were told you had to pay more. You’d probably be outraged if you weren’t allowed to cancel without having to pay penalty. Unfortunately, that’s exactly what mobile companies have got away with.

Why? Most mobile companies’ T&Cs include a caveat that lets them put up prices by the RPI rate of inflation. And this can vary – last year Orange hiked prices by 4.34%, and this year Three put them up by 3.6%. You’ve been with us every step of the way and your comments haven’t fallen on deaf ears – we think it’s time to tell mobile companies that Fixed Means Fixed.

It’s simple; if a customer signs up to a fixed deal, where they can be tied in for up to two years, then all of the terms of that deal, including price, should be fixed for the contract’s duration.

If a mobile company feels it needs to put up prices, it should factor this into deals for new customers and not impose such hikes on existing customers who are already locked in. We have submitted a formal complaint to Ofcom packed full of your feedback and we need your support to help make it stand up and take notice:


Providers may protest that their price rises aren’t significant for individual customers, but we’ve worked out that with around 10.5 million Brits affected so far, consumers have spent almost £34.5m extra as a result. In a year, mobile companies could make a hugely significant £90m. That’s £90m that we, the customers, didn’t think we’d agreed to when we signed our contracts.

Shifting the balance of power back in your favour

If mobile providers can’t or won’t commit to Fixed Means Fixed not only should they be upfront about this in their advertising, they should give customers the ability to cancel without penalty if they change the deal. This means you could refuse a contract with variable terms, or accept a contract with fixed terms and cancel if those terms change.

If you agree with our campaign, show your support using the pledge above. The balance of power needs to be put back in your favour – Ofcom must intervene now and stamp out this practice so that you can be confident that fixed really does mean fixed.

Comments

I would like to see this apply to all forms of contract and not just those for mobile phone services. Still, it’s a good start.

If a company wishes to reserve the right to increase prices during a contract period, this should be identified as a ‘variable price contract’ and every customer informed when signing up to their contract. Most people will want certainty of what they will be expected to pay, so fixed price contracts are the only sensible way forward.

It’s good to see Which? finally unveiling their plans to support the many calls for action against these practices, and I will certainly support them all the way.

However, this practice is not ONLY limited to mobile companies.

I have experienced it at the hands of BT on landline contracts, and Primus are only just now in the process of notifying customers of an unexpected price hike on their landline prices too… prices which customers are lead to believe are “fixed” within the terms of their minimum period!

So I would like to see the remit of this campaign extended to include all telecoms products and services, and not just mobile phone products and services please?

As this problem is now clearly “spreading like wildfire” as more and more companies follow suit having seen others set precedent within the industry!

Hello Wavechange and Sean, thanks for the support. We have to start somewhere and since you’ve been vocal on this, we have launched this particular Fixed Means Fixed campaign. Let’s hope we get lots of support.

Rich says:
16 July 2012

Dear Which?

In the case of Three, consumers should have been allowed to cancel under term 10.1(d), as the price rise is detrimental. Do you have any comment on why this was disallowed for virtually every customer who attempted to invoke it?

Price rises aside, should such examples not also be tackled with this campaign? Three have likely acted illegally by denying this right, in my opinion. The contract should not only be enforced where they decide, as it is most unfair.

Rich says:
16 July 2012

(…meant to subscribe!)

Thomas Harvey says:
16 July 2012

Three really have no clear case for charging an ETC with their contracts worded as they are – did I mention that they have tried to add VAT to my ETC? Luckily the Executive Office have pretty much decided to stall until a deadlock letter no-longer needs to be issued. It’s really a shame OFCOM and the communications ombudsman have just put their heads in the sand over this issue.

Rich says:
13 August 2012

I’d still like an answer to my question please, Which?.

Consumers had the right to leave following notification of the price rise, as defined under section 10.1(d) of the terms provided to the customer when taking out their contract for supply of services.

You advised to pay under protest. You’ve offered nothing further on the matter since that advice. As such, people are out there now, paying under protest. They are likely to still be doing this, as they fear damaging their credit rating – as-per your advice.

I forced my PAC from Three, and moved network. They sent me a final bill, complete with termination fee. I queried this with them, and heard nothing back. Further digging on my side revealed my account had been marked “closed” on my credit report, with a balance of “£0” remaining, and is classed as “settled”.

If I – a very average man with no legal training, no army of lawyers, no writers, no staff – can read and understand my rights under the terms and conditions, and use them to leave my contract as-per the method stipulated under the such terms, why have you allowed countless other people to continue paying under protest?

Your lack of input or advice on the matter is astonishing. You’ve put your resources into your “Fixed means fixed” campaign, but have left all those Three customers hung out to dry on the matter.

And their case was far more clear than Orange or T-Mobile customers – Three’s terms did _not_ grant them any right to increase prices.

I’m disappointed in you.

What does Which propose should happen when optional charges are increased? For example, many frequent travellers (including short-term ex-pats) chose Vodafone because they charged an optional flat fee of £10/month for data roaming within the EEA. Vodafone have just increased this to £3/day (£90/month) but many of those consumers remain locked into long-term contracts with Vodafone. The main reason they chose Vodafone no longer applies but they cannot escape the new charges for the remainder of their contracts.

Emeles says:
3 August 2012

Exactly what’s happened to me but made worse by the fact the original roaming cost was being ‘refunded’ each month as a concession to remain with vodarubbish. No I am faced with an increase from £0/mth to £90/mth and no get out option.
I am counting down the days to end of contract……

Kal El says:
16 July 2012

Good to see Which? finally responding. Shame it’s to late for all of the Three customers!!

Hi Kal El,

Yes, I am more than happy to ask Three that very same question, thanks!

And yes agreed! For many of us who could not afford to contest the price increase of Three because of the real punitive financial damage of the ETC, small claims court costs, etc. amongst other factors in this case, it is sadly of little help now we are trapped in until the end of our existing contract.

Kal El says:
16 July 2012

Just asked Three for a comment on the #fixedmeansfixed campaign on twitter. Anyone think I might get a response? Please feel free to do the same.

Kal El says:
16 July 2012

And the reply I revieved:
Hi Anthony, This is the first time we’ve raised prices for contract customers in 9 years. The rise is in line with inflation and lower than price increases from other mobile networks

What a joke they are!!!

I agree Kal El, Three just don’t get it!

Let’s give this campaign our full support and attract as much media attention as possible to highlight the issue… particularly in the case of Three!

This is welcome and I wish the campaign well, but I too still think it’s too late for those people who followed Which?’s earlier advice.

There are three ways to address this exploitative practice:
1. Prohibit it if OFCOM can do this so that fixed does mean fixed.
2. Give maximum publicity to clauses in contracts which allow this, e.g. in selection criteria, key features, so that such contracts can be avoided. However, if the providers club together and all operate this practice we’re sunk again.
3. Use pay-as-you-go and minimise usage. After all, market forces should apply – eventually.
Good luck to the Which? campaign.

“We have submitted a formal complaint to Ofcom packed full of your feedback and we need your support to help make it stand up and take notice:”

Not strictly true though is it which?

Is this a “super complaint” as you are authorised by the old Department for Trade to submit, under the old enterprise act?
Which? as a designated consumer body, can submit a “super complaint” to the OFT? where it thinks there maybe a market practice that is damaging competition/customers.
This super complaint puts the complaint on a fast track and must be responded to within 90 days.

To now call for people to join a campaign is simply marketing by which? – “super complaints” do not need to be backed up by submissions from individuals, to imply that this may be the case is misleading, similar to business marketing campaigns.

Is this true Which? ????

Hello Frugal, this is not a super complaint. We would hope that Ofcom takes notice and we’ll do everything in our power for it to do so. One thing that will be a big help is consumer support – if we can have a huge bank of you as our supporters for Fixed Means Fixed, Ofcom will be more likely to take notice.

Just as your thousands of comments were a big driver for this Fixed Means Fixed campaign, your pledges could help drive Ofcom to do something about it. We think your voice matters and has clout, but there’s certainly more clout in numbers. And pledges don’t only help with the regulator, the numbers can help others take notice that this really is a serious issue that many consumers care about. Thanks.

I’ve just read through your ofcom complaint Patrick, found on another link.
I have to say, it raises some serious questions about Which?

Under Which? “Remedies” heading:
“We otherwise expect consumers to abide by the
contract terms, including early termination fees, during the fixed term.
14 We also consider that these measures will help to intensify competition

I cannot believe that a consumer body would be happy with a consumer paying a penalty charge!
If a fee/charge is does not recover “actual loss” regardless of area of business, regardless of where it is included in a contract or not, that fee/charge becomes “a penalty” and as legal precedent going back over 100 years states, a penalty charge is unenforceable under common law in England and Wales.

Which? advocate and propose that customers should be paying early termination fees with no regard to legal precedent?
Staggering!

How do Which? believe that forcing customers to pay early termination fees would “help to intensify competition”?
I have a 2 year contract @£20 per month – I’ve paid it for a year, but now I see a rival network offering 200 more minutes for the same price/phone as I have.
But to leave my existing contract I have to pay £240 termination fees, how would this remotely “intensify competition”?
Truly a bizarre statement to make.

“Where a fixed term period has ended, and consumers enjoy a contract rolling
on from month to month, operators should have freedom to vary or change the terms of the offer. This should occur only after clear and sufficient notice”

We have already seen this happening, a contract runs it’s course then goes month to month, first thing a customer notices is when their bill suddenly shoots up as the 200 free texts or minutes are removed from the rolling month to month terms without any notice.
Operators should NOT have the freedom to vary/change terms for rolling month to month after a contract has been completed. Companies have shown they cannot be trusted to notify customers.

Why haven’t Which? submitted a “super complaint”?
Submit super complaint and wait for the 90 days for a response, then take action upon the outcome. It really is that easy to do.

Hi Patrick,

And thank you for the response. I am more than happy as you already know, given my passion on the subject, to fully support your current initiative with OFCOM regarding the issues at hand, and I promise you I will do so in every way I possibly can.

But I’m sorry, I really do have to ask the question once more, as your response really does not answer the question that was posed by Frugal Ways in any way at all.

If you truly do have the power (as Frugal Ways suggests) to raise this issue as a “super complaint”, given the already massive amount of input and reaction from the many members of the public who have contributed to your own forum threads on the subject, why have you chosen not to do so already, but instead request even more publicity in terms of reaction?

I have no desire whatsoever to undermine the current “Fixed Means Fixed” initiative… but you can understand I am sure, how leaving that question unanswered clearly only serves to do just that in the minds of some of us here, and it does concern me as I was previously unaware that you had such power of resolution so to do?

James Mitchell says:
16 July 2012

All well and good but what about other utilities? e.g. Sky are increasing their prices in September. BT regular increase their prices….the list goes on. people still have contacts with these companies.

So you say it’s wrong for mobile phone companies to do this when it’s clearly OK for other utility companies to do this?

Durr says:
16 July 2012

I was talking to consumer advice about this issue a few weeks ago and I asked them about the 1 month notice thing and they said something along the lines of as long as you have pointed out the them you don’t agree with it to Three then if it goes over 1 month it doesn’t matter. They said it’s just a scare tactic from Three to make you panic and give up after a month, as long as you state you are protesting and send them letters / emails to that effect trying to cancel under 10.1.d you should be fine to take further action later on. Even if this which campaign doesn’t lead us out of our contracts (I hope it will though), it will at least point the finger to these companies who get away with putting the price up and blaming rpi.

It isn’t rpi we are paying for, we are paying for Three to get LTE and for all their stores to be refurbished. Bombard Three with this on twitter; post the campaign everywhere; bring it to the attention of as many people as possible. This should get those companies shaking in their boots and will hopefully lead to other mobile companies (and other types of contracts) making it clear.

David Butcher says:
16 July 2012

Despite the increase imposed by Orange last year by way of a merry text message, they are still bombarding me with sales calls asking me to take out contracts with them for home phone etc. They are having a laugh – they didn’t honour the last contract I had with them. Why on earth would I ever take another? I am now on an unlocked phone and out of contract so I can leave them at any time. Their action last year was bad enough; their communication skills (bizarrely given their business) were appalling.

badda_bing says:
16 July 2012

Great news to hear that something is finally moving forward, I was starting to feel as though our efforts on the other thread were pointless. I think it important to point out that it’s not only price hikes, and ambiguous contract terms that need sorting but the appalling customer service that seems to go along with them.

Three really aren’t a customer centric company and I hope OFCOM take note and take action.

Well done to us all for getting this going, demonstrates that you can have a voice. I’ll be tweeting tonight.

never@mind.me says:
16 July 2012

why is it not a supercomplaint, ie why are you not making a supercomplaint? strikes me as a bit odd.

The reason that long contracts exist is because most of the monthly charge is a subsidy for a free or cheap handset. Therefore the monthly charge is effectively a repayment of a 24-month loan. An end to the practice of the service contract subsidising the handset would be positive for consumers. Unbundling of the two would make costs more transparent to consumers and would discourage many consumers from acquiring handsets that they can’t ultimately afford. When I tell people that I pay £500 for an iPhone and under £10/month for the service contract, they are amazed that the iPhone costs so much and that the service contract costs so little, yet both reflect the true prices of the unbundled goods and service, and over 24 months I pay much less than those who opt for a bundled package. SIM-free handsets and SIM-only service contracts are still the exception in the UK, but are the norm in many other countries where competition between networks operates more effectively. If all customers of UK networks bought unsubsidised non-SIM-locked handsets and were on one-month service contracts, the networks would be more competitive to retain customers rather than unfairly imposing price increases on customers whom they have locked into 24-month contracts.

I agree. Many are brainwashed into believing that they need the latest and greatest phone, so a contract just gives them an excuse for changing their phone. Not only would separating phone and call charges avoid a lot of wasted hardware but it would mean that there would be no need for long contracts.

M. T. T. says:
17 July 2012

I disagree @wavechange, people aren’t brainwashed into believing they ‘need’ anything…….people purchase many things they don’t ‘need’ but rather ‘want’. If people want it and are prepared to pay for it then that’s what’s going to happen.

I don’t need a BMW but I wanted one, I can afford it and now I have it.

As for @NFH, ‘unsubsidised non-SIM-locked handsets’ is fantasy.

MTT, the availability of unsubsidised non-SIM-locked handsets is already widespread; however relatively few consumers buy them. Most consumers incorrectly believe that the only way to acquire a new handset is through a long-term service contract. The prevalence of heavily subsidised handsets disguises the handsets’ true cost and as Wavechange suggests, it encourages the unnecessary replacement of handsets, often by those who cannot afford them. The iPhone is a good example, whereby it costs £500 SIM-free, but can be acquired “for free” on condition of a very expensive 24-month contract, most of which is a disguised loan for the iPhone. Unbundling of handsets and services would encourage competition through increased mobility between networks and would render mid-contract price increases unattractive for the networks.

Will says:
17 July 2012

I’m supporting this campaign as fuly as I can. It may not get me out of any of my Three contracts early but it will prove to be a thorn in the side of a company that’s turned it’s back on it’s formerly loyal customers. I have posted links to this page on Three’s Facebook and Blog pages and am using Twitter to draw my followers attention to it as well as getting it into Three’s search timeline.

Three have resorted to their original stock repsonse for now of “its the first time we’ve done it in 9 years and everyone else has done it…” which shows they don’t really understand the argument being presented to them. It will be interesting to see what their Social Media and “Customer Serviec” people will be authorised to say once their management have got a handle on the situation.

Jay Jayaseelan says:
17 July 2012

My contract started in Jan 2012 and by May I was informed that the contract will cost me more. I am on a 300 minute, 300 texts and unlimited interenet contract and have so far used about 20 minutes and 20 texts per month out of that contract since January. And 3 times a week I use the Golf App on my golf course. T Mobile sent me a letter informing of the price increase and informed me that I can leave the contract but will incur a payment to leave. Does this apply in other parts of life, where one party can break the contract but the other has no choice? If this small print had been highlighted on my signing of the contract I would not have accepted T Mobile as my provider.

I signed this contract through Phones 4 U and do not have any dealings with T Mobile as such.

Hi everyone, to those asking why we haven’t submitted this as a super complaint. As you may know, Which? is able to make a super complaint under powers granted by the Enterprise Act 2002. However, it can take a long time for us to put a super complaint together given the duty on regulators to respond. In the case of Fixed Means Fixed, there was clearly a huge call for us to act quickly, which is why we have promptly submitted a formal complaint on this occasion.

Plus, we think your pledges of support are incredibly powerful in getting regulators to understand that this is a big issue that consumers care about. We believe in people power and think that your views on Fixed Means Fixed deserve promotion beyond the walls of Which? Conversation – your pledges will help make mobile companies and Ofcom take notice and do something about this.

Will says:
17 July 2012

Is there any way we can be kept up to date with the number of people pledging support for #fixedmeansfixed? It would be a helpful stat to quote as we promote it across the social networks and show the companies that this does have serious backing of the people.

Hi Will – there will be, although not just yet I’m afraid! I’m on our online campaigns team and am looking at a way to get a counter on the page. It might not be up until the end of the week, but I’ll let you know when it’s there. In the meantime, a huge thanks to all of you who’ve helped us by tweeting about it, facebooking it, and generally spreading the word. If you have websites or blogs of your own and you’d like to put a copy of the pledge up there so people can sign it directly on your website, do let me know (via consumeraction [at] which.co.uk) and I’ll send you a code so you can use it too.

“…your pledges will help make mobile companies and Ofcom take notice and do something about this.”
So Patrick, rather than force OFCOM, trading standards or OFT to act, Which? think coersion will work by putting pressure upon OFCOM?

So far, OFCOM have responded with “It’s down to the individual to prove”.
Trading standards have done nothing.
The OFT have done nothing.
Three have responded with utter contempt for customers, even attempting to report them down for spam on twitter and ignored them on their own forums.
Orange did nothing and went ahead with price rises.
The increasing the pressure approach has already failed. Why do Which? persist with it?

Say for examples sake, that this Which? complaint to OFCOM is taken seriously and OFCOM propose the actions that Which? suggested in it’s complaint (I strongly disagree with Which? views that early termination fees are acceptable for customers to pay) then OFCOM would have to consider “the needs of the business” before any action could be taken.
If OFCOM’s actions are detrimental to the business of the companies concerned, in this case Three and Orange, then under the Hampton principles of regulation, the proposed OFCOM action cannot be enforced.

OFCOM can try to persuade mobile companies to change the way they operate, but this could take years and will have little or no effect, as one money spinning door closes another way to maintain profit margins will be found.
In the meantime, many people are being misled into thinking that something can be done by supporting this Which? campaign, which looks good for which? in the form of extra coverage and promotion, but in reality will do very little for the customers shelling out their hard earned cash on mobile contracts that were almost certainly mis-sold.

As has been said already, the longer this farce goes on, the more mobile companies will join in and do it, the more the customers lose out.
It won’t stop there, customers in other areas of business have seen this approached used to extort (because that’s what it is, extortion!) money from their shrinking incomes and so it will continue to happen.

Consumer bodies have the power to issue “super complaints” for the sake of a few extra days/weeks, would it not be more beneficial to issue one and follow it through to it’s conclusion rather than token gestures to the regulator in the hope they will be able to persuade the industry to change?
Three and Orange are still deemed to be “compliant” businesses with OFCOM, so are still benefitting from “head office” style, light touch regulation and all the benefits that brings.
They have shown by their lack of action and ignorance of consumer bodies such as Which? that they couldn’t care less about customers, it’s all about profits.
In the meantime, we the public are blowing in the wind…

H Patrick,

You responded:
“However, it can take a long time for us to put a super complaint together given the duty on regulators to respond”

Can I ask how long it actually does take to put a super complaint together please?

Has anyone written a Mobile network provider and informed them that they will no longer be paying the agreed price as the service is less than expected and as a result they have decided to pay 80% of the agreed price?

Yes, and after increasing my monthly charge by 3.5%, they’ve given me a permanent discount of 10% for the bad service, so I’m better off than I was before the price increase.

Could there be a solution here somewhere?

More developments and confusion for which? and OFCOM to answer.

http://www.thisismoney.co.uk/money/bills/article-2174196/Mobile-phone-firms-attack-price-rises-fixed-tariffs.html
(Dated 16th July)

“They are then trapped in a contract, unable to switch to a cheaper provider without paying a hefty penalty.
‘Ofcom must intervene now and stamp this out. Consumers must be confident that fixed really does mean fixed”
(Quote: Richard Lloyd, the executive director of Which?)

So why then are which? saying (in their official complaint to OFCOM) that “We otherwise expect consumers to abide by the contract terms, including early termination fees, during the fixed term”?
Which? executive director in public, recognises that customers are trapped paying a hefty penalty, yet in the complaint submitted to OFCOM, one suggested remedy by which? is that they expect consumers to abide by contract terms including paying early termination fees?
Which? view termination fees as a penalty or not?

More confusion arises with OFCOM.
In the same article, a statement by OFCOM;
“Ofcom said it had been investigating the practice across all networks since January after receiving complaints and said it would look at information submitted by Which?

A spokesman said: ‘We understand why consumers in fixed term contracts are sometimes disappointed to find that the particular contract they have signed up to allows price rises.
‘While current rules allow for contracts to include price increases in certain circumstances, after receiving consumer complaints on this issue, Ofcom launched a review in January 2012.

‘The review is examining requirements on communications providers relating to consumer contracts, including provisions covering changes to contracts.
‘This exercise has identified a number of potential issues with the current regime and the adequacy of the current level of customer protection.
‘We will consider the material provided by Which? alongside this evidence. We will also be meeting Which? to discuss their concerns in more detail before we make any decisions regarding our work under our current review.”

Funny that, as posters on the three conversation posted replies from OFCOM that made no mention of this.
I looked for the promised post by which? with details of a response from OFCOM, but cannot find one (has it been moved?)
No mention from OFCOM that they have been looking into contracts since January, yet in public they are now saying it’s under investigation, when for months they have been telling consumers that it is down to individual circumstances and they will not be investigating at this time?

In light of these inconsistances, it seems obvious to me, that a super complaint is now called for with immediate effect.
Responses should also be obtained from trading standards, the OFT and government as to why this is being permitted to go ahead unchallenged.
OFCOM are saying one thing to the media while replying differently to individual public complaints, totally unacceptable!
Personally, I don’t believe OFCOM have a clue what they are doing.

Hey Frugal, just on the few points you’ve made (and Sean, you’ll be interested in my second para!).

I think you may have misunderstand what we’ve said. We consider that ‘fixed means fixed’ and if you sign up to a deal with a clear price and terms that tie you in for 12 or more months, we of course agree you shouldn’t face any hidden or unexpected change in prices. If you do, we absolutely agree and think you should be able to cancel without paying any early termination fee. If, however, you get a fair and equal bargain with a fixed price, but you decide to cancel the contract, we think it’s fair that you pay the termination fee: the supplier kept to the bargain and the normal T&Cs apply. Early termination fees, if properly brought to your attention and where the supplier has acted fairly and lawfully, are not a ‘penalty’.

Since January Ofcom has been undertaking a ‘monitoring and enforcement programme’ of general condition 9. This can be found here: http://stakeholders.ofcom.org.uk/enforcement/competition-bulletins/open-cases/all-open-cases/cw_01082/. Despite this, given the number of comments and feedback we received about the issue, we felt speedy action was necessary. We met with Ofcom this week and will be pressing them for a clear timetable for action, setting out precisely when they will respond to our complaint, and at this stage we have no reason to think it’s not treating the issue seriously. One benefit of a super complaint is the statutory timetable for response, which is 90 days, and this requires the relevant regulator to ‘publish a response stating how it proposes to deal with the complaint’ within this timescale. And we reserve the option to raise this issue as a super complaint but, given the co-operation we expect to receive from Ofcom, we don’t think it’s necessary to use this power at this stage.

We agree that it’s a serious problem if the quality of a service changes and you’ve not been clearly notified. It may also be a breach of the Unfair Terms of Consumer Contracts Regulations 1999, which states “A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer.” Mobile providers don’t, therefore, have complete freedom to change or vary their terms and shouldn’t do so without clear notice. A rolling monthly contract allows you to cancel, usually with a month’s notice, and the power you have to change supplier is the most effective constraint on abusive conduct by firms.

Thanks guys and you’re all doing a great job with spreading the words Fixed Means Fixed!

Patrck, you raise two issues in your first paragraph.

“If, however, you get a fair and equal bargain with a fixed price, but you decide to cancel the contract, we think it’s fair that you pay the termination fee: the supplier kept to the bargain and the normal T&Cs apply.”
How does this sit with one of your suggested remedies, included in your OFCOM complaint?
How will paying termination fees “increase competition”?

If I have to pay months of “fees” then this negates any financial benefit in switching to another deal/provider?

“Early termination fees, if properly brought to your attention and where the supplier has acted fairly and lawfully, are not a ‘penalty’.”
Which? are quite wrong on this.
Not my opinion, but over 100 years of legal precedent!
Your own executive director, Richard Lloyd, claims they are “a hefty penalty”

It matters not what clauses are included in any given contract for any product or service, if fees/charges are claimed back from the other party, unless those fees/charges are recovering an “actual loss” they are, under common law in England and Wales, “a penalty” and as such unenforceable.
Bank charges, although in account terms and conditions, were penalty charges as they make the bank a profit and are not for actual loss. This is why millions were refunded by banks.
The exact same applies to mobile phone operators.
Clauses in contracts can be argued about until blue in the face, the fact remains that unless an individual is still paying off the cost of the handset with their contract, the remainder being charged to exit that contract is a financial penalty, as it is not for the operator’s actual loss.
Three can call this a fee, a charge or derek, it makes no difference.
Three can have it included in every single term & condition in the contract, it makes no difference.
It IS a penalty charge and is unenforceable under common law.
How a consumer body such as Which? can deem any charge/fee that is not recovering actual loss as acceptable, is a joke.
You post much about the costs involved with your solicitors yet they cannot collectively find legal precedent, which any non legal person can find via a search engine?

I’m sure we all agree, Which? and posters to this forum, that if a price is quoted per month for a mobile contract, then that should be honoured.
This makes it easy for OFCOM, trading standards and Which? to take action.
Take one individual case, show to OFCOM/trading standards that the advertised price at the point of sale and on the contract is being increased, without the information given to the individual at the point of sale “to make an informed buying decision” – it really is that cut and dried.
If OFCOM won’t act, then take the matter to a court or issue a super complaint.

There is no need for months of investigating, collecting evidence and canvassing for support, after all, didn’t OFCOM state in the case of Orange, that the number of complaints has no effect on the issue being reported.
Either it does (as is clear for all to see) or it doesn’t, they can’t have it both ways.

It may also be a breach of the Unfair Terms of Consumer Contracts Regulations 1999, which states “A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer.
OFCOM have already given their opinion on this, that increasing the price by the RPI is not an unfair term. So why are Which? registering a formal complaint to ask about what OFCOM have already answered?

Why did OFCOM not notify a single customer that complained about Three, that they were in the process of an investigation?
What is the time difference between Which? submitting a super complaint and an official complaint?

Frugal Ways, your questions around early termination fees – there’s a key difference between a contract where the company has stuck to the terms and one in which it hasn’t. If the company hasn’t stuck to the terms, or has made significant changes that you wouldn’t or couldn’t expect (as in the case of mobile price rises on a ‘fixed’ contract) we think it’s wrong to pay these fees. If the company has stuck to the terms then yes, an early termination fee is acceptable. Why? Well, most contracts these days come with a free phone, so to allow people to cancel with no penalty one month in would have us all walking around with free phones or (more likely) no opportunity for a company to offer this sort of contract to those who want it. Also, most early termination charges will relate to revenues foregone from a mutually agreed contract, rather than an actual ‘penalty.’

See my comment below to sean for detail on complaint vs supercomplaint. There’s also a link to our past supercomplaints so you can see what they look like and why they take so long to put together!
 
Hope this clears things up.
 

Nikki, I have to say I think your “key difference” is a very unsatisfactory way to look at it. In the case of Three, beyond which I confess to have little interest, either Three are entitled to raise prices with impunity or not. The *contractual* issue of the Cancellation Fee follows naturally.

What Frugal Ways is talking about is something outwith the contract, i.e. that such penalty fees are unenforceable. A few years ago Ofcom said that such fees must reflect only the actual losses suffered by the company, which is, I suspect, based upon the same or a similar legal principle, but so far as I am aware they have not yet put that onto an enforcement plateau. Courts still can and will.

It seems to me that mobile companies are trying to have their cake and eat it on this point. I’ve heard it said they are not regulated by the Consumer Credit Act, yet these “100%” Cancellation Fees effectively mean you’ve had a loan, regardless of whether it relates to the handset. I’d be surprised to learn that the Cancellation Fee is any different for SIM-only deals, so I can’t accept the justification regarding handsets. But if the Cancellation Fee does relate to the handset, then clearly it has to be a CCA Regulated Agreement. I haven’t looked into it in any great detail, but there’s clearly something fishy about it.

And of course, there is the irony that if these Cancellation Fees are pure loss then it follows that there are no or no significant running costs, yet it’s the increase of those non-existant costs that the Mobile companies point to as justification for the rises.

Nikki,
You are deliberately trying to cloud the issue.
First you say, “there’s a key difference between a contract where the company has stuck to the terms and one in which it hasn’t” – then you address the first claim (“a company that hasn’t stuck to the terms of the contract”) then attempt to apply a second claim under the same proviso (“or has made significant changes that you wouldn’t or couldn’t expect”)

The issues are clear cut and seperate;
* Company hasn’t abided by the contract terms – contract is broken/void – no fees are payable (legal precedent)
* Company makes significant changes to terms in contract – contract can be either accepted by other party or is broken/void – no fees are payable (legal precedent)

You continue, If the company has stuck to the terms then yes, an early termination fee is acceptable.
There is no legal precedent for this, this is the opinion of Which?

Where Which? is on dangerous ground here and in part, why I have such deep reservations about your complaint to OFCOM in this case, is as follows;
There has yet, to my knowledge, never been a case in the high courts, where a company has imposed financial charges/fees upon another party to a contract, which has not been for proven “actual loss” and a judge has ruled that those fees/charges are enforceable under common law.
This is legal precedent. This has been the case for over 100 years.

OFCOM take no notice/action with regard to individual complaints from the public, even a thousand complaints from a thousand individuals on the same issue, results in no action.
Which? have powers to submit a super complaint, they are taken notice of by OFCOM, they have their ear.
Now if OFCOM take on board and agree with Which’s view that early termination fees are acceptable without proof of actual loss, or legal precedent, then this dilutes the rights of the very consumers that Which? proclaim to speak on behalf of.

Which? will have influenced OFCOM the regulator as well as sent a signal to mobile phone companies (on this issue) and other areas of business that these fees are acceptable. Other consumer bodies and those in power could also be influenced by it.
Many people come to Which? to ask for advice/help/sound off about cases of public concern, Which? advice – as it is now – would be based upon OPINION and not based in legal precedent.

Until such time as early termination fees are proven as “actual loss” in a high court, Which? is wrong to base it’s advice and consultations with regulators and the public, on their own opinions.